Material Misstatements

News & Analysis as of

SEC Sanctions Adviser for Misstatements in Advertisements, Client Presentations and Regulatory Filings

The SEC found that a registered investment adviser that operates as a “manager of managers” misstated a sub-adviser’s investment performance in communications with its clients, potential clients and the SEC. According to the...more

The PCAOB’s Enhanced Auditor Performance Standards–Be Sure You’re Ready

A little over a year ago the PCAOB issued new Auditing Standard No. 18, which enhanced auditor performance standards in three significant areas of a company’s audit: - Company relationships and transactions with related...more

Know Your Weaknesses: PwC reports on disclosing material weaknesses during the IPO process. 

PwC recently released a study on the effect of disclosing material weaknesses (MWs) during an issuer’s initial public offering. Disclosing material weaknesses, which are defined by the SEC as “a deficiency, or a combination...more

If Considered Material, False Statements Made to Federal Regulatory Bodies Create Exposure to Criminal Liability - United States...

The U.S. Court of Appeals for the Tenth Circuit reversed a conviction for making a false statement to the U.S. Patent and Trademark Office (USPTO), holding that a false statement is not material if it could not influence the...more

Recent MCDC Settlements Provide Guidance Concerning Scope of Materiality in Continuing Disclosure Obligations

In responding to the Securities and Exchange Commission’s recent Municipalities Continuing Disclosure Cooperation (MCDC) initiative, the unanswered question for many municipalities and broker-dealers was determining whether...more

Hastert Reaches Plea Deal in Anti-Money Laundering Case – Guilty Plea Expected

As I reported in a June 2, 2015 client alert, on May 28, 2015, Dennis Hastert, former Speaker of the U.S. House of Representatives, was indicted by a federal grand jury in the Northern District of Illinois. Mr. Hastert, a...more

Structured Thoughts: News for the financial services community, Volume 6, Issue 6

U.S. Structured Warrant Programs: Introduction - U.S. and non-U.S. banks have offered structured warrants in the U.S. to address the needs of both institutional and high-net worth investors. This article will...more

Add-On Products Add up to $63M Settlement With FDIC

Why it matters - Credit card add-on products were the subject of a recent enforcement action brought by the Federal Deposit Insurance Corporation (FDIC) against Comenity Bank of Delaware and Comenity Capital Bank in...more

One Size Does Not Fit All: Written Disclosure Policies in a Time of Increased SEC Enforcement

The U.S. Securities and Exchange Commission (SEC) continues to increase its enforcement efforts in the municipal bond market by focusing on the sufficiency and timeliness of disclosure in initial municipal securities...more

Five Advantages to Section 18 – A New Weapon for Institutions

Section 18 of the Securities Exchange Act, while seldom used in the past, has been increasingly used by institutional investors in suits against banks and other entities. The advantages of Section 18 are as follows...more

SEC Sanctions Investment Adviser For Materially False Advertisements

The SEC recently instituted proceedings against a registered investment adviser and its founder, CEO and majority shareholder for allegedly making material misstatements and omissions regarding the amount of assets...more

SEC Issues Wells Notice to Pimco Over Fund Valuations

On Monday, August 3, 2015, Pacific Investment Management Co. LLC (Pimco) announced that it had received a Wells notice from the Securities and Exchange Commission concerning the valuation of certain nonagency mortgage-backed...more

Court of Appeals Warns Against Complacency in the PSLRA’s Safe Harbor

SEC Rule 10b-5 makes it unlawful to misstate a material fact (or omit to say something if the omission would render misleading what you do say) in connection with the purchase or sale of a security. The Private Securities...more

PCAOB Launches Audit Committee “Dialogue”

As part of its audit committee outreach efforts, the Public Company Accounting Oversight Board has established a webpage called "Audit Committee Dialogue" focusing on recurrent areas of concern identified by the PCAOB over...more

Bridging the Week - June 2015 #4

Investment Adviser Chief Compliance Officer Blamed in SEC Lawsuit for President’s Theft of Client Funds; SEC Commissioner Criticizes Enforcement Actions Against CCOs Generally - The Securities and Exchange Commission...more

The Guide to Social Media and the Securities Laws

The growing use of social media has created challenges for federal securities regulators, who must enforce antifraud rules that were written at a time when the prevailing technology was the newspaper. This Guide...more

Compliance Officers Can Face Individual Liability for Corporate Importation Violations

Corporate officers and shareholders take note: personal liability for unpaid duties may result from material misrepresentations on import documentation even when the importer of record is a corporate entity. The corporate...more

SEC Files Financial Fraud Actions, Mired In Controversy

In the wake of the market crisis and the formation of a task force, the SEC has sought to focus in part on financial fraud actions. The action filed at the close of last week against Computer Sciences Corporation and seven of...more

Fourth Circuit Case Reminds Government Contractors of False Claims Act Breadth

The recent opinion from the U.S. Court of Appeals for the Fourth Circuit in United States ex rel. Badr v. Triple Canopy, Inc., serves as a reminder of the breadth of the civil False Claims Act when applied to federal...more

The MCDC Initiative: December Was Just The Beginning

As many of our issuer clients know, as a result of perceived wide-spread violations of post issuance reporting compliance, in 2014 the SEC conducted its “Municipal Continuing Disclosure Compliance Initiative” or the “MCDC...more

Securities and Governance Update

With a single statement the SEC upended the private ordering of how shareholder proposals are often dealt with in the height of proxy season. Historically, it has been well settled that companies may exclude shareholder...more

Liability for Statements of Opinion–New Clarity from the Supreme Court

The U.S. Supreme Court’s recent decision in Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund resolved a clear split in the federal courts of appeal regarding when statements of opinion may give...more

Implications of the U.S. Supreme Court Omnicare Decision

On March 24, 2015, the U.S. Supreme Court issued its decision in Omnicare, Inc., et al. v. Laborers District Council Construction Industry Pension Fund, et al., addressing when an issuer may be held liable for material...more

Corporate Investigations & White Collar Defense - April 2015

It’s Stifling in Here! SEC Rules That Companies Can’t Put Restrictive Language in Confidentiality Agreements That Could Potentially Stifle Whistleblowers - Why it matters: On April 1, 2015, the SEC announced its...more

Three Top Considerations After Omnicare

In Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund, 575 U. S. ____ (2015), the Supreme Court clarified issuer liability under §11 of the Securities Act. Section 11 provides that issuers are...more

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